Problem:
On February 1, 2006 Toms River Construction Company obtained a contract to build a baseball stadium in Lakewood for $3,300,000. The stadium was to be built at a total cost of $2,700,000 and was scheduled for completion by September 1, 2008. Important information is presented below:
2006 2007 2008
Costs to date 891,000 1,925,000 2,750,000
Estimated costs to complete 1,809,000 825,000 -0-
Progress billings to date 600,000 1,550,000 3,300,000
Cash collected to date 500,000 1,400,000 3,300,000
Required to do:
a) Using the percentage of completion method, compute the estimated gross profit recognized in the years 2006-2008.
b) Prepare a partial balance sheet for December 31, 2007, showing the balances in the accounts receivable and construction in process inventory account.